Danish Krone Weakens After Novo Nordisk's Clinical Trial Failure

The Danish krone has experienced a decline following disappointing clinical trial results from the country's pharmaceutical giant, Novo Nordisk A/S. The results have raised concerns about the potential impact on the Scandinavian nation's economy.

On Friday, the krone was trading at 7.4614 against the euro in Copenhagen, slightly down from 7.4592 prior to the announcement of Novo Nordisk's data. Despite the decline, the krone remained within the central bank’s established currency peg range of 7.2925 to 7.6282. According to market analysts, there were no signs of intervention in the foreign exchange market.

The decline was triggered by data indicating that patients using Novo Nordisk's experimental obesity drug, CagriSema, lost less weight than expected during a study. This news caused Novo's shares to plummet by as much as 29%, pulling down Denmark's benchmark OMXC25 index by over 5%.

Kristoffer Kjaer Lomholt, head of FX research at Danske Bank A/S, noted that the sell-off of Novo Nordisk contributed to the euro strengthening against the Danish krone. He added that corporate sector flows, including those from pharmaceutical companies, have become significantly important in recent years, especially with Novo Nordisk's ascendancy.

Despite the drop, Lomholt emphasized the low market volumes due to the upcoming Christmas holidays and stated that there was no urgent need for market intervention. In recent years, the Danish economy has become increasingly dependent on Novo Nordisk.